Report by- Sabyasachi Bhattacharya
Reliance Industries(RIL) announced their Q2 results; Let’s take a look at their financials for the quarter-
Reliance Industries (RIL) reported an operationally healthy Q2FY19 with mixed performance across verticals. The overall strong performance was majorly driven by growth in the petrochemical, digital and retail segments. Consumer business maintained its momentum. Jio continued to impress with quarterly performance. Despite strong competition, operating revenue increased and the company was able to sustain operating margins as well.
Take a look at the company’s report, released today.
As expected, the petrochemical segment reported a robust performance and contributed to overall profitability. The 56 percent topline growth was driven by a mix of higher prices and higher volume, especially in the new products of paraxylene (PX) and refinery off-gas cracker (ROGC). EBIT growth of 63 percent was driven by higher volumes with the stabilisation of the ROGC, its downstream units and the new PX facility. Better margins in the integrated polyester chain also helped improve segment profitability though gains were partially offset by softer polymer margins. Volumes in the upstream oil and gas business saw a natural decline which led to an almost 12 percent contraction in revenue, despite higher prices of crude and gas. Production from both the domestic business and US operations fell 25 and 31 percent, respectively. Jio’s net revenues rose 13.9 percent quarter-on-quarter (QoQ) to Rs 9240 crore. Growth was driven by a net addition of 37 million subscribers during the quarter. Subscriber addition was higher than all competitors put together and the base has touched 250 million within 25 months of its commencement of services. Jio’s ARPU (average revenue per user) witnessed a marginal dip of 2.1 percent on QoQ basis to Rs 131.7 per month.
Take a look at how JIO accelerated growth for Reliance-
Jio’s EBITDA margin was flat compared to the preceding quarter. Interest cost outlay increased by 29.7 percent leading to 11.3 percent increase in profit-after-tax (PAT), lower than the growth in EBITDA. Jio plans to launch JioGigaFiber and reach 50 million homes across 1,100 cities. To expedite this, it has bought a strategic stake in Den Networks Limited (Den) and Hathway Cable and Datacom Limited (Hathway). This will also help Jio local access cable operators, content producers and the companies. RIL has completed most major planned capital expenditures and the units have started stabilizing. With projects starting to deliver, the company is likely to see steady cash flows during the year which would enable further operating efficiencies and higher returns. The overall macro environment is also conducive for the various verticals where the company has exposure. The company is now focussing on aggressively expanding the retail consumer business presence. The segment has been delivering stellar growth and we expect this to continue and margins to improve further with increasing volumes. We believe Jio would continue its stellar run, going forward, on the back of significant capacity, latest 4G technology, roll-out of JioGigaFiber, partnership with Den and Hathway and huge unmet potential available in India.
Source- MoneyControl, Purple Trades Research Department
Markets yet again saw selling across various sectors as major Indices end up in the RED-
Chart source- Upstox
Indian Markets yet again suffered a downfall in the hands of the bears. Nifty had a Gap-down opening in the morning which indicated bearish behavior. From there-on the markets moved lower till the end hours of the day. In the last One and a Half hour market tried to retaliate from a loss of almost 600 points but it wasn’t enough as SENSEX yet again went into the red by losing 463.95 points. The 30-share BSE Sensex was down 463.95 points or 1.33 percent at 34,315.63 and the 50-share NSE Nifty slipped 149.50 points or 1.43 percent to 10,303.50. The market breadth was in favor of bears as about two shares declined for every share rising on the BSE. All sectoral indices closed in the red barring FMCG that gained 0.8 percent. HDFC, Infosys and Reliance Industries were leading contributors to the Nifty’s fall. HCL Technologies, Tech Mahindra, Indiabulls Housing Finance, Tata Motors, Axis Bank and Maruti Suzuki caught in bear trap. Asian Market Indices were trading in the RED as Nikkei was down by 126.08 points today. The same effect of Asian markets was seen in Indian Markets. Most of the major Indices were in the red.
Let’s take a look at the performance of major Indices.
Source- MoneyControl, Purple Trades Research Department
Let us take a look at some of the factors that led to the steep downfall of the markets-
- The India Volatility index moved near 20 levels again. Spurt in volatility after the dips of last few sessions suggests that upside could be restricted again in the market. India VIX jumped 10.7 percent to 19.90.
- Trump administration on Wednesday said it is planning to “revise” the definition of employment and specialty occupations under the H-1B visas by January. Analysts believe this move will have an adverse impact on Indian IT companies in the US and small and medium-sized contractual firms mostly owned by Indian-Americans. HCL Technologies, Tech Mahindra, Infosys lost 3-6 percent.
- NBFCs including housing finance companies saw heavy selling pressure as Nifty Financial Service was down 1.3 percent. Indiabulls Housing Finance shares crashed 17 percent to hit fresh 21-month low despite management clarification on developer loan portfolio and RBI easing liquidity coverage ratio norms.
- Shares of Reliance Industries fell over 5 percent intraday on Friday as investors reacted to the September quarter results declared by the company. Analysts told CNBC-TV18 that some strain on the core petchem business could have likely been noted by investors.
- Precious metals like Silver moved up by 28 points whereas crude oil also moved up by 14 points which was not a good indicator for the investors.
- Brent crude futures gained a percent to trade around $80 a barrel. Also, Germany’s DAX slipped 0.33 percent amid weak third-quarter corporate results.
- Sell-off in US markets along with Asian markets weighed on indices in India. The Dow shed over 300 points in trade amid geopolitical fears in Italy along with concerns on interest rate scenario as well as worries in Chinese economy had an adverse impact on US markets.
Top sectors that moved the market today- Data source- Moneycontrol
Top Gainers for today- Data source- Moneycontrol
Top losers for today- Data source- Moneycontrol